Last week, especially Thursday and Friday turned out to be good for the equity markets, largely on the
back of clarifications by US Fed that they are in no hurry to taper off the ongoing Quantitative Easing (QE
III). This was against the backdrop of a very sharp cool off in equity and risk asset markets across the
globe last month when Fed announced its road map of tapering the QE III. They have clearly linked the
tapering plan to the unemployment numbers and the growth numbers which continue to come out of
the US. We believe that there will be some tapering of QE III which might happen towards the end of this
year. It is difficult to figure out the quantum and the exact timing for the same. The US economy
continues to do well from a macro economic perspective. There have been continuous additions of jobs
which have surprised most of the analysts on the positive.
As far as India is concerned, we had a pretty dismal set of numbers as far as IIP is concerned. We had a
negative 1.6% number versus a positive 1.5% expectation which the markets generally had. The
manufacturing outlook continues to be quite weak with a de-growth also coming up last month. We
continue to believe that there is a need for continuous monetary easing for a sustainable bounce back in
economic growth. We believe that when the RBI meets during the end of this month, we would see a
rate cut irrespective of the fact that Rupee has weakened against the dollar significantly. We would
expect a 25 bps cut in repo rate and may be a 25 bps cut in CRR rate when the RBI meets towards the end
of the month.
Also, in terms of the result season, we have seen a decent start to the earnings season so far. Infosys
came up with a better than expected Dollar revenue growth and as a reaction to that the stock did jump
quite significantly on Friday. This is a decent start as far as the IT sector earnings are concerned. And we
expect most of the companies in the IT space would be able to deliver between 0 and 4% dollar revenue
In terms of the banking results so far, IndusInd bank came up with a pretty decent set of numbers with a
40% Y-o-Y growth. We believe that private sector banking names will continue to deliver good set of
numbers with 15% - 20% flat growth for this quarter. We also expect Pharma and FMCG companies to
also deliver 15% Y-o-Y growth on earnings. We expect that Pharma, IT, FMCG and Private Sector Banking
names would continue to probably outperform their peers on the back of very strong earnings growth.
India's annual consumer price inflation picked up in June to 9.87 percent, after slowing for three straight
months. It grew to 9.87 percent in June from 9.31 percent in May 2013.
Reflecting a persistent slowdown, India’s industrial production in May contracted by 1.6 per cent, lowest in
the past 11 months, on account of poor show by the manufacturing and mining sectors.
India's trade deficit narrowed in June to $12.24 billion from $20.14 billion in May, as the growth in gold and
silver imports slowed to 22.8 percent year-on-year at $2.45 billion in June.
Greece secured a lifeline from the euro zone and the IMF of 6.8 billion Euro’s on Monday which spares
Greece defaulting on debt in August.
Ratings agency Fitch downgraded France from the top AAA credit rating to AA+ on Friday, citing a heavier
government debt load and poor prospects for growth
The U.S. government posted $117 billion budget surplus in June which was far more than expectations of
$39.5 billion. This is one of the latest sign of rapidly improving public finances and also the improving
China's annual consumer inflation accelerated more than expected in June to 2.7 percent from 2.1percent
in May 2013, partly because of the base effect.
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
8/7/2013 19,325 5,989 10,655 12,900 6,158 9,135 6,895 9,079 6,246 7,543 8,743 1,614 1,486 3,699
9/7/2013 19,439 6,032 10,686 13,062 6,277 9,269 6,908 9,209 6,280 7,578 8,747 1,644 1,511 3,713
10/7/2013 19,294 6,008 10,526 12,981 6,399 9,178 6,864 9,220 6,321 7,509 8,588 1,628 1,491 3,723
11/7/2013 19,676 6,049 10,584 13,303 6,358 9,347 6,963 9,284 6,411 7,734 8,742 1,653 1,527 3,779
12/7/2013 19,958 6,048 10,572 13,376 6,298 9,529 6,948 9,385 6,826 7,747 8,800 1,665 1,518 3,973
3.28% 1.00% -0.79% 3.70% 2.27% 4.31% 0.76% 3.37% 9.28% 2.70% 0.65% 3.12% 2.16% 7.43%
Satadru Mitra Varun Goel Jharna Agarwal
Abbas Naheed Kinjal Doshi
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